The Vache Farm decision brings welcome news for landowners on rental levels and the inclusion of re-development break clauses in telecoms leases.
Background
The case (EE Limited (1) and Hutchison 3G UK Limited (2) v AP Wireless II (UK) Limited) centres around the renewal of a telecoms lease of a greenfield site at Vache Farm in Buckinghamshire. The site itself is a grass field, adjacent to a woodland area.
The landlord was AP Wireless II (UK) Ltd (APW) and the tenant was EE Limited and Hutchison 3G UK Limited (EE/H3G).
The contractual term of the lease under which EE/H3G occupied had come to an end in May 2020, with EE/H3G continuing to occupy pursuant to the Telecoms Code. New rights were requested, but could not be agreed by consent. The main terms in dispute were:
1. The level of rent to be paid; and
2. The insertion of a re-development break clause.
The Rental Position
Previous cases have held that a rent of £750 per annum should be payable for a rural mast site which is isolated from residential dwellings.
In Vache Farm, though, APW argued that £750 per annum was too low and presented expert evidence by way of comparables to support its view. The appropriate rental level, it said, should be £2,850 per annum.
EE/H3G resisted this submission, presenting its own expert evidence on the basis that the rent should be £1,000 per annum.
The experts for both parties agreed, though, that the £750 per annum figure outlined in Affinity Water should be adjusted to take into account inflation.
The Insertion of a Re-Development Break Clause
The parties also disagreed over the insertion of a re-development break clause. Many of the points of contention were those typically associated with sites where re-development may be envisaged, either in a Code setting or a broader commercial setting under the Landlord and Tenant Act 1954.
Those points included:
1. Whether APW should have the opportunity to terminate the lease where it intends to redevelop in connection with a use connected to electronic communications;
2. Whether that right should be at any time, or only after 5 years;
3. Whether APW needed to show a "settled intention" to re-develop, or whether it simply needed to 'desire' to re-develop;
4. Whether APW would need to show that it could not reasonably re-develop without obtaining vacant possession; and
5. Whether APW should have the right to terminate the lease at all (based on paragraph 21 of the Code no longer being satisfied);
Decision
Having considered all of the expert evidence, the Tribunal held that a suitable rental level would be £1,750 per annum.
It did not, however, update the figures set out in Affinity Water, with the Tribunal noting that it did not consider this a necessary step. It did, however, reiterate "the impact of inflation on figures determined in previous years".
On the re-development clause, the Tribunal held that a break clause should be included allowing APW to terminate the lease on 18 months' notice expiring on the fifth or any subsequent anniversary of the term commencement date, where it intends to re-develop all or part of the site and cannot reasonably do so while the lease continues.
The Vache Farm decision demonstrates that rental levels can be adjusted from those set out in previous cases. This will be relevant for negotiations on new leases as well as rent reviews under existing leases.
Similarly, Vache Farm shows that a landowner is able to ensure that sufficient protections are included in any agreement so that they are not restricted in what they can do with their land in the future.
